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AI capex is so big that it's affecting economic statistics
- oytis 1y agoI just hope when (if) the hype is over, we can repurpose the capacities for something useful (e.g. drug discovery etc.)
- te_chris 1y agoAs the author says: this capex isn’t a railroad, it’s a very expensive immediately depreciating asset. We should be so lucky
- midnightclubbed 1y agoMaybe there will be a benefit from the additional power generation and infrastructure that will still be available if the data centers don’t need it. Can’t believe I have to state the obvious and say that is only a potential gain if the power/cooling is from renewable sources. But I do
- intended 1y agoThat’s a mighty big if.
- sour-taste 1y agoWe won't. Well lay off engineers to balance the books and destroy unneeded capacity.
- toomuchtodo 1y agoVery Grapes of Wrath.
- teaearlgraycold 1y agoA competent government might rent these company’s GPUs to cure major diseases once they’re sitting idle.
- Bluestein 1y ago(or they'll end up mining crypto as the only viable alternative, crashing the whole tent )
- dgfitz 1y agoBitcoin still needs a-minin’.
- Retr0id 1y agoGPUs haven't been useful for bitcoin mining for a long time.
- apwell23 1y agoyearly AI capex is more than NASA and NIH combined
- actionfromafar 1y agoSo, not very much, all things considered.
- lenerdenator 1y agoTell that to Congress.
- esseph 1y agoThat would be $75 billion combined for 2025. A drop in the bucket. -- > From 2013 to 2020, cloud infrastructure capex rose methodically—from $32 billion to $119 billion. That's significant, but manageable. Post-2020? The curve steepens. By 2024, we hit $285 billion. And in 2025 alone, the top 11 cloud providers are forecasted to deploy a staggering $392 billion—MORE than the entire previous two years combined. https://www.wisdomtree.com/investments/blog/2025/05/21/this-is-what-ai-commitment-looks-like-392-billion-and-rising https://www.wisdomtree.com/investments/blog/2025/05/21/this-...
- armchairhacker 1y agoVery cheap game consoles and VR headsets. Unironically that could really help world peace and QOL: less news and doomscrolling, and people would have an outlet for stress, anger, and boredom.
- lenerdenator 1y agoI've never seen a group more easily angered than gamers. "What do you mean the women in this game have proportions roughly equivalent to what's actually possible in nature?!?!"
- miningape 1y ago[flagged]
- woah 1y agoIt's about ethics in game journalism!
- drdaeman 1y agoThat's a subset of gamers, specifically gamers who actively want a hypersexualized characters and still haven't figured out how to ignore the irrelevant products and still chose to be angered if some product doesn't fit their requirements (despite no shortage of games that would fit the bill).
- intended 1y agoThe most trust and safety research I’ve seen - on things like recidivism, ban success, pro social behavior - comes from gaming. Dota, league, he’ll - Roblox, twitch, discord - have some of the most data on how angry humans are when they play vidya.
- tuatoru 1y agoThe data are easily accessible, and the target group has little political power and is seen as problematic and about the only remaining legitimate target for negative discourse. Imagine the reception that studies of female aggression get.
- 827a 1y agoIf you have a GPU which you've used for AI training, but that's no longer valuable, you could sell that GPU; but then you'd incur taxable revenue. If you destroy the GPU, you can write it off as a loss, which reduces your taxable income. Its possible you could come out ahead by selling everything off, but then you'd have to pay expensive people to manage the sell off, logistics, etc. What a mess. Easier to just destroy everything and take the write-off.
- phil21 1y agoCapital equipment is depreciated over time. By the time you're selling it off, it's pennies on the dollar and a small recoupment of cost. Paying 30% (or whatever) taxes on that small amount of income and having 70% remaining is still better than zero dollars and zero taxes. It is a giant pain to sell off this gear if you are using in-house folks to do so. Usually not worth it, and why things end up trashed as you state. If I have a dozen 10 year old servers to get rid of - it's usually not worth anyone's time or energy to list them for $200 on ebay and figure out shipping logistics. However, at scale the situation and numbers change - you can call in an equipment liquidator who can wheel out 500 racks full of gear at a time and you get paid for their disposal on top of it. Usually a win/win situation since you no longer have expensive people trying to figure out who to call to get rid of it, how to do data destruction properly, etc. This usually is a help to the bottom line in almost all cases I've seen, on top of it saving internal man-hours. If you're in "failed startup being liquidated for asset value" territory, then the receiver/those in charge typically have a fiduciary duty to find the best reasonable outcome for the investors. It's rarely throwing gear with residual value in the trash. See: used Aeron chair market.
- triceratops 1y ago> that's no longer valuable, you could sell that GPU; but then you'd incur taxable revenue Unless GPUs are like post-Covid used cars you're going to sell them at a loss which can be written off. Write-offs don't have to involve destroying the asset. I don't know where you got that idea.
- barbazoo 1y agoOn the other hand, drug discovery sounds like it's a candidate for really benefitting from AI. To fuel AI model development, there maybe has to be all the garbage that comes with AI.
- lm28469 1y agoWhat drugs? The leading causes of death are routine induced, 80% of cancers are caused by your environment, &c. We have much better things to do with these billions
- ribosometronome 1y agoDrugs to cure the diseases caused by your environment. It's not as if people are suddenly going to be making perfect decisions (e.g. never getting a sunburn, not eating meat, avoiding sugary foods).
- lm28469 1y agoSo all these things that skyrocketed in the span of 75 years are immutable facts of life, but magic drugs are somehow in the realm of possibilities? What's easier, educate your people and feed them well to build a strong and healthy nation OR let them rot and shovel billions to pharma corps in the hope of finding a magic cure?
- astrange 1y agoSecond one's easier. Technological improvements are always easier than social change. > shovel billions to pharma corps in the hope of finding a magic cure? What do you mean finding? We already found it (GLP-1 inhibitors). Ozempic is even owned by a nonprofit (Novo Nordisk). See, everything's fine.
- ribosometronome 1y ago>skyrocketed in the span of 75 years are immutable facts of life A number of them seem to have skyrocketed with quality of life and personal wealth. I suspect my ancestors were skinny not because they were educated on eating well but because they lacked the same access to food we have in modern society, especially super caloric ones. I don't super want to go back to an ice cream scarce world. Things like meat consumption are linked to colon cancer and most folk are unwilling to give that up or practice meat-light diets. People generally like smoking! Education campaigns got that down briefly but it was generally not because people didn't want to smoke, it's because they didn't want cancer. Vaping is clearly popular nowadays. Alcohol, too! The WHO says there is no safe amount of alcohol consumption and attributes lots of cancer to even light drinking. I suspect people would enjoy being able to regularly have a glass of wine or beer and not have it cost them their life.
- alphazard 1y agoThe rest of the world has not caught up to current LLM capabilities. If it all stopped tomorrow and we couldn't build anything more intelligent than what we have now: there would be years of work automating away toil across various industries.
- Terr_ 1y agoCreating oodles of new jobs in internally QAing LLM results, or finding and suing companies for reckless outcomes. :p
- alphazard 1y agoAs long as liability is clearly assigned, it doesn't have an economic impact. The ambiguity of liability is what creates negative economic impact. Once it's assigned initially through law, then it can be reassigned via contract in exchange for cash to ensure the most productive outcome. e.g. if OpenAI is responsible for any damages caused by ChatGPT then the service shuts down until you waive liability and then it's back up. Similarly if companies are responsible for the chat bots they deploy then they can buy insurance or put up guard rails around the chat bot, or not use it.
- Terr_ 1y ago> As long as liability is clearly assigned, it doesn't have an economic impact In a reality with perfect knowledge, complete laws always applied, and populated by un-bankrupt-able immortals with infinite lines of credit, yes. :P
- sterlind 1y agomy experience using LLM-powered tools (e.g. copilot in agent mode) has been underwhelming. like, shockingly so. like not cd-ing to the wrong dir where a script is located, and getting lost, disregarding my instructions to run ./tests.ps1 and running `dotnet test`, writing syntactically incorrect scripts and failing to correct them, particularly being overwhelmed by verbose logs. sometimes it even fails to understand the semantic meaning of my prompts. whereas my experience describing my problem and actually asking the AI is much, much smoother. I'm not convinced the "LLM+scaffolding" paradigm will work all that well. sanity degrades with context length, and even the models with huge context windows don't seem to use it all that effectively. RAG searches often give lackluster results. the models fundamentally seem to do poorly with using commands to accomplish tasks. I think fundamental model advances are needed to make most things more than superficially automatable: better planning/goal-directed behavior, a more organic connection to RAG context, automatic gym synthesis, and RL-based fine tuning (that holds up to distribution shift.) I think that will come, but I think if LLMs plateau here they won't have much more impact than Google Search did in the '90s.
- baxtr 1y agoRe hype: Why is it that so many people are completely obsessed with replacing all developers and any other white-collar job? They seem to be totally convinced that this will happen. 100% To me, this all sounds like an “end-of-the-world” nihilistic wet dream, and I don’t buy the hype. Is it’s just me?
- ToucanLoucan 1y ago> Re hype: Why is it that so many people are completely obsessed with replacing all developers and any other white-collar job? They seem to be totally convinced that this will happen. 100% Because the only thing that gets the executive class hornier than new iPhone-tier products is getting to layoff tons of staff. It sends the stock price through the roof. It follows from there that an iPhone-tier product that also lets them layoff tons of staff would be like fucking catnip to them.
- astrange 1y agoThe job description of a developer is to replace themselves by automating themselves so they can get promoted/find a new more relevant role. That's the point of compilers and new programming languages. There's no such thing as taking people's jobs, nobody and nothing is going to take your job except for Jay Powell, and productivity improvements cause employment to increase not decrease.
- ivape 1y agoPeople really hate late stage capitalism.
- noitpmeder 1y agoBecause developer and other white-collar job salaries are the top expense of most companies.
- kulahan 1y agoOh boy I can’t wait until we get rid of the highest paying jobs! Your response doesn’t explain why so many people are hyped about it, just why CEOs are.
- whydoyoucare 1y agoAren't advancements in AI actually helping drug discovery?
- jahewson 1y agoThis implies that a human life is valuable but what they spend it doing is not.
- charleshn 1y agoI'm always surprised by the number of people posting here that are dismissive of AI and the obvious unstoppable progress. Just looking at what happened with chess, go, strategy games, protein folding etc, it's obvious that pretty much any field/problem that can be formalised and cheaply verified - e.g. mathematics, algorithms etc - will be solved, and that it's only a matter of time before we have domain-specific ASI. I strongly encourage everyone to read about the bitter lesson [0] and verifier's law [1]. [0] http://www.incompleteideas.net/IncIdeas/BitterLesson.html http://www.incompleteideas.net/IncIdeas/BitterLesson.html [1] https://www.jasonwei.net/blog/asymmetry-of-verification-and-verifiers-law https://www.jasonwei.net/blog/asymmetry-of-verification-and-...
- oytis 1y agoIt's very different from chess etc. If we could formalise and "solve" software engineering precisely, it would be really cool, and probably indeed just lift programming to a new level of abstraction. I don't mind if software jobs move from writing software to verifying software either if it makes the whole process more efficient and the software becomes better as a result. Again, not what is happening here. What is happening, at least in AI optimist CEO minds is "disruption". Drop the quality while cutting costs dramatically.
- charleshn 1y agoI mentioned algorithms, not software engineering, precisely for that reason. But the next step is obviously increased formalism via formal methods, deterministic simulators etc, basically so that one could define an environment for a RL agent.
- bigyabai 1y agoI'll bet you $1,000*10^32 that AI never formalizes a novel FFT algorithm worth more than a dime.
- puchatek 1y agoIt's unlikely that LLMs are gonna get us there though. They ingested all relevant data at this point at the net effect might very well kill future sources of quality data. How is e.g. stackoverflow gonna stay alive if the next generation of programmers relies mainly on copilot and vibe coding? And what will the LLMs scrape once it's gone?
- tootie 1y agoCloud gaming 2.0
- jandrewrogers 1y agoDuring the 1990s dotcom boom we massively overbuilt fiber networks. It was indiscriminate and most of the fiber was never lit. After the dotcom crash, much of this infrastructure became distressed assets that could be picked up for peanuts. This fueled a large number of new startups in the aftermath that built business models figuring out how to effectively leverage all of this dead fiber when you don't have to pay the huge capital costs of building it out yourself. At the time, you could essentially build a nationwide fiber network for a few million dollars if you were clever, and people did. These new data centers will find a use, even if it ends up being by some startup who picks it up for nothing after a crash. This has been a pattern in US tech for a long time. The carcass of the previous boom's whale becomes cheap fuel for the next generation of companies.
- segmondy 1y agoI can barely get 50Mbps up/down and I only have xfinity in this area. No fiber, I will pay for it, but here we are. 2025 in good ol USA. In an urban area too.
- cute_boi 1y agoYou are lucky to have 50Mbps up. I have rented in 2-3 big cities and the upload speed was maximum 20mbps.
- suddengunter 1y agowow When a few years ago I moved from Eastern Europe (where I had 1GB/s to my apartment for years) to the UK I was surprised that "the best" internet connection I was able to get was about 40MBit/s phone line. But it's a small town, and during past years even we have fiber up to 2GB/s now. I'm surprised US still has issues that you mentioned. Have you considered Starlink(fuck Musk, but the product is decent)/alternatives?
- Fade_Dance 1y agoThe US issues have some key driving factors: One is, of course, the size of the country, but that's hardly an "excuse." It does contribute though. The other big reason is lack of competition in the ISP space, and this is compounded by a distinctly American captured system where the owners/operators of the "public" utility poles shut out new entrants and have no incentive to improve the situation. Meanwhile the nationwide regulatory agencies have been stripped down and courts have de-toothed them, reducing likelihood of top-down reform, and often these sorts of problems inevitably end up running into the local and state government vs national government split that is far more severe in the US. So it's one of those problems that is surprising to some degree, but when you read about things like public utility telephone poles captured by corporate interests, it's also distinctly ridiculous and American, and not surprising at all.
- afiodorov 1y agoI live next to an abandoned building from the Spanish property boom. It's now occupied illegally. Hype's over yet the consequence is staring at me every day. I am sure it'll eventually be knocked down or repurposed yet it'd be better had the misallocation never happened.
- Aeolun 1y ago> It's now occupied illegally. So it’s still being used now. That’s good right?
- tim333 1y agoI bought a flat in the Spanish property boom. It was empty a while with ~80% of flats in the area vacant, then I had a squatter, now kicked out. Now most of the property is occupied and the Spanish government are bringing in huge restrictions to ease the property shortage. These things go in cycles. The boom and bust isn't very efficient but there you go.
- casey2 1y agoDepends if Nvidia is having their partners to destroy their cards to prevent flooding. I really would not put it past them.
- datadrivenangel 1y agoNow is this AI CapEx or data and IT CapEx? Because everyone and their mother are labeling regular data centers as AI data centers.
- hatthew 1y agoIt seems like it's specifically based on nvidia's sales, which I assume almost entirely for deep learning. "Regular" data centers don't need many GPUs.
- throw0101c 1y ago> Because everyone and their mother are labeling regular data centers as AI data centers. Companies (generally) build things with an expectation for a return on their investment: what "regular" data centre usage would necessitate these kind of build-outs? To sell more Postgres or WordPress VMs/instances? Is that being used to justify the spending in shareholder conference calls and regulatory filings?
- lukeschlather 1y agoSubstantially this is Meta, Google, etc. These are advertising companies. They substantially create ML models that do advertising targeting, etc. Meta, it should be noted, doesn't sell LLMs at all. They sell ads. And though they are doing a lot of stuff with AI using this infrastructure... any datacenters they build primarily exist to sell ads.
- gazpacho 1y agoI just wish we forced every new data center to be built with renewables or something. The marginal cost over a conventional data center can’t be that big compared to the total cost, and these companies can afford it. Maybe it can help advance the next generation of small modular nuclear reactors or something.
- jraph 1y agoI wish the hardware itself were renewable too.
- loeg 1y agoData centers want firm power to avoid underutilizing expensive assets. Solar and wind are intermittent. New gas has a years-long lead out. 12+ hours of batteries (solar in winter) are, in fact, not free or de minimis.
- bpodgursky 1y agoThese companies would all LOVE to use small modular nuclear reactors in their datacenters... if the NRC ever got around to approving a license for one.
- loeg 1y agoPeople like the idea of economical SMRs, but it seems unlikely they will ever be economical. There's no real reason not to just build LMRs instead (e.g., AP1000).
- phil21 1y agoMany of these companies are very interested in small nuclear tech as a means to power these facilities. The major bottleneck now for most of them is finding sites where grid capacity exists to power them. Talking to anyone in the space for more than 30 minutes and nuclear with come up. I very much hope the hype cycle lasts long enough for some of this capital raining down from the sky to get these reactors deployed in the field, because those will be a lasting positive from this hype cycle - much like laying railroad infrastructure and fiber optic cables came from other hype cycles. I've often said that the robber barons sucked, but at least they left massive amounts of physical infrastructure for the average person to benefit from. The hype cycles of late leave very little in comparison.
- x86x87 1y agoI hear AI data centers are consuming more power than the entire country of Argentina /s But I don't hear anyone worried about the massive power consumption without a clear indication if this is a net positive for our society.
- criddell 1y ago> if this is a net positive for our society Maybe that's something that can only be determined looking back. There are so many unknown unknowns.
- zegax 1y agoRoughly 5% of energy in the US is dedicated towards AI datacenters. The current usage will double to 70–90 TWh/year by 2026-2027. For software heavy tech businesses it makes sense to host your own AI data center so that you could train it on your codebase and have developers build faster. Not sure if this benefits humanity that much..
- mattmanser 1y agoWill it? Google originally started trying to sell search servers you'd install on site. And on prem (even on your cloud) is not a model any of the big boys will want to follow. We're yet to see if it's going to be a winner takes all market or whether there will end up a Linux equivalent pop up that destroys all the investment from the big players because programmers are too tight to pay for software.
- woah 1y agoIs Argentina a net positive for our society? There's the grilled beef, but every country has some kind of barbecue. There's a few soccer players I guess? Is Argentina worth the energy expenditure though?
- x86x87 1y agothat was a joke regarding bitcoin not Argentina. also: congrats for jumping to the worst possible interpretation
- stefan_ 1y agoApparently the telecom boost was 2020? What am I missing? Using sus statistics to draw weird conclusions.
- betaby 1y agoThere were some major network upgrades during COVID times dueto traffic growth induced by work from home.
- jsnell 1y agoI don't see how you can make the argument that a large portion of funds used for AI capex were diverted from other investments (and starving other industries), while simultaneously applying the economic multiplier to the whole sum when going from the investments to the GDP impact. Surely you only get one of the two, because for diverted investments the multiplier applies equally on both sides of the equation.
- arthurofbabylon 1y agoHence the title, "Honey, AI Capex is Eating the Economy."
- jsnell 1y agoThat seems like a non sequitur. He is making two arguments. One is that AI capex is starving other industries. And the other that AI capex is causing major GDP growth, attributed to both the direct investments themselves, as well as the multiplier effects. One of those could be true. But I assert that both cannot be true at the same time. If these direct investments were going to happen elsewhere if they weren't happening for AI infrastructure then that counterfactual spending would show up in the GDP instead, as would the multiplier effect from that spending.
- tuatoru 1y agoIf AI's demand for money drives up the hurdle rate, the minimum rate of return that investors are prepared to accept, then AI investment could both be large and starving other industries of investment. Increasing demand does increase the price in most markets.
- asdev 1y agohow many signs of a bubble do we need?
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- noman-land 1y agoThe only sign you'll ever get is the pop, no?
- raldi 1y agoWhat future evidence would convince you it's not a bubble?
- BirAdam 1y agoA positive ROI
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- B1FF_PSUVM 1y agoAnd they're not even making paperclips, as in https://www.google.com/search?q=ai+paperclipping https://www.google.com/search?q=ai+paperclipping The 1880s 6% on railroads is an interesting number, I didn't know it was that much.
- enb 1y agoWhy does this link open up a different app on my iphone?
- jonas21 1y agoI don't know... 1.2% of GDP just doesn't seem that extreme to me. Certainly nowhere near "eating the economy" level compared to other transformative technologies or programs like: - Apollo program: 4% - Railroads: 6% (mentioned by the author) - Covid stimulus: 27% - WW2 defense: 40%
- zachlatta 1y agoWe are only 2 years in! 1.2% of GDP is enormous! The fact that we can even make any of these comparisons is stunning.
- dude250711 1y agoIt's hard for me to tell what is a bigger misspending of money - LLMs or Apollo... At least I have a direct access to LLMs. Not sure I would need a direct access to moon rocks though.
- nilamo 1y agoOne is a footnote in history on the way to decent ML, and the other is the literal moon in the sky. Your comment must be dripping in sarcasm.
- UncleOxidant 1y agoIt seems quite plausible that if we hadn't done the Apollo program that we'd probably be about 10 to 20 years behind in semiconductors right now (not to mention other technologies).
- roenxi 1y agoWhen you say "we" I assume you are from Taiwan? Good for you people, but it isn't much of a win for US industrial policy when it pushes Taiwan to the ascendant position and seems to be locking in Asian dominance of tech manufacturing.
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- mikewarot 1y agoI'm waiting for the shoe to drop when someone comes out with an FPGA optimized for reconfigurable computing and lowers the cost of llm compute by 90% or better.
- pdhborges 1y agoWhere is that improvement coming from? Hardware is already here to compute gemm as fast as possible.
- leakyfilter 1y agoRaw gemm computation was never the real bottleneck, especially on the newer GPUs. Feeding the matmuls i.e memory bandwidth is where it’s at, especially in the newer GPUs.
- trhway 1y agoWe're already seeing it with DeepSeek's and other optimizations - like that law with highways - the wider the highway the even more usage of it. Dropping by 90% would open even more use cases. For white-collar jobs replacement - we can always evolve up the knowledge/skills/value chain. It is the blue-collar jobs where bloodbath with all the robotics is coming.
- mad0 1y ago> For white-collar jobs replacement - we can always evolve up the knowledge/skills/value chain. I'm not so sure about this one. I partially agree with the statement, but less-abled collegues might have troubles with this :( Ultimately there will be less stuff to do for a plain human being.
- crystal_revenge 1y agoThis is where I do wish we had more people working on the theoretical CS side of things in this space. Once you recognize that all ML techniques, including LLMs, are fundamentally compression techniques you should be able to come up with some estimates of the minimum feasible size of an LLM based on: information that can be encoded in a given parameter size, relationship between loss of information and model performance, and information contained in the original data set. I simultaneously believe LLMs are bigger than the need to be, but suspect they need to be larger than most people think given that you are trying to store a fantastically large amount of information. Even given lossy compression (which ironically is what makes LLMs "generalize"), we're still talking about an enormous corpus of data we're trying to represent.
- padjo 1y ago> the scale and pace of capital deployment into a rapidly depreciating technology is remarkable That’s an interesting perspective. It does feel a bit like we’re setting money on fire.
- siavosh 1y agoWhat if anything would it take to actually change the markets perception that expectations may not be met in a significant way?
- tptacek 1y agoCan you annualize Nvidia's Q1 results simply by multiplying them by 4?
- jsnell 1y agoFor a first approximation, yes? Their earnings have been growing steadily for years ($4-5B growth in each of the last 8 quarters), with no seasonal effects. Q1*4 is highly likely to be a better estimate of their eventual 2025 calendar revenue than their current trailing 12 months revenue would be. Probably still a bit conservative, but easier to justify than projecting that growth continues at exactly the same pace.
- lucbocahut 1y agoThe main argument builds on the assumption that the economy is a zero sum game when it clearly is not. Just because we invest these ressources in AI does not mean we could mobilize the same capital for other pursuits. Precisely AI is being built out today because the value returned is expected to be massive. I would argue this value will be far bigger than railroads ever could be. Overspending will happen, for sure, in certain geographies or for specialty hardware, maybe even capacity will outpace demand for a while, but I don’t think the author makes a good case that we are there yet.
- arthurofbabylon 1y ago> "... builds on the assumption that the economy is a zero sum game when it clearly is not" Be cautious making assessments as to compounding effects; while it remains the critical attribute, the compounding nature of a system is not always obvious. For example, the author is correct that financing for AI CapEx is starving other fields of investment at least in the short term.
- schimmy_changa 1y agoIn addition, the massive investment may be overbuilt, but then likely will end up being useful long-term. This is just as the initial buildout of the internet to power pets.com was a bust at the time, but then led to Amazon, YouTube, Zoom, etc and in fact led to us being able to weather Covid better than you'd have expected. The modern internet came from folks getting connected over-exuberantly based on near-term returns (with a lot of investors losing their shirts) but then humans figured out what the actual best use of the technology. Highly recommend this book for more, Carlota Perez is very insightful: https://en.wikipedia.org/wiki/Technological_Revolutions_and_Financial_Capital https://en.wikipedia.org/wiki/Technological_Revolutions_and_...
- jnmandal 1y ago> Just because we invest these ressources in AI does not mean we could mobilize the same capital for other pursuits. No offense but you sound naive here. This is exactly how dry powder manifests in PE/VC and is even predictable under cash rich corporate regines via M&A. Trends like this are ripe for acceleration under favorable environmental conditions like high interest rates. Not to mention, a lot of it develops out of peer pressure. Sometimes when your job is to deploy capital, you just deploy it. Of course you try to put it in the best possible places. But when those are few, well yeah... This happens.
- constantcrying 1y agoThe premise of AI and certainly what a large subset of executives and investors believe is that AI will provide a significant productivity increase to a significant part of the work force. Of 30% of the work is done 10% faster that leaves a 3% gain for other economic activities. If that is true the CapEx is justified.
- gitfan86 1y agoThe counterintuitive part of automation is that it removes parts of the economy rather than making the economy bigger. You end up with more goods but the value people assign to them goes down as they don't provide additional social advantage. For example at one point nails were 0.5% of the economy and today owning a nail factory is a low margin business that has no social status. Similarly the percentage of the economy and social status associated with frontend software dev will get automated and become a smaller percentage of the economy. Since social status is a zero sum game people increase spending in other areas where social status can be helped.
- visarga 1y ago> The counterintuitive part of automation is that it removes parts of the economy rather than making the economy bigger So you believe in zero sum economy? I think new capabilities lead to demand expansion, they mobilize latent demand that was sleeping. There is no limit to desires, not even AI automation could outrun them.
- gitfan86 1y agoNails are not zero sum. You can get a bunch of nails without limiting how many nails I have. Social status is zero sum and as more of the economy gets automated that becomes all that is left that is scarce
- tuatoru 1y agoFront-end software dev, call centers, HR, administration like health insurance and eventually some government bureaucracy, law, education, marketing, mass-market entertainment, banking and other financial services, business consulting, financial advice and accounting services, journalism, and probably other smaller employers. Potentially all of those, and more, become smaller employers in relative terms. A better nail-making machine is a single-purpose technology. It's not going to affect productivity much in unrelated industries such as healthcare, for example. AI is a general-purpose technology like electric light or electric motors. It has the potential to improve productivity in a great many productive activities. As another person said here, even if progress in AI stopped now, we have twenty years' sustained productivity growth ahead of us in adapting processes to use AI more effectively across the whole economy. Whether the economy as a whole grows or shrinks depends mainly on whether households will buy more entertainment, legal services, financial services, or all the rest because they are now cheaper, and to a lesser extent on whether we can discover new things that households want to buy.
- ksec 1y agoThat is why I stated transistor improvements what was previously known as Moore's law will continue for at least another 10 years. The Smartphone has carried us from 2008 - 2023. The money that is being used today are already invested into the next 2 - 3 years of Semi Conductor manufacturing. That is 2nm or A20 this year and A18 / 14 in two years time. There is enough momentum towards A10 and A8 by 2030, 2032. Even if things slows down by then it is enough to run till 2035 unless something catastrophic like WW3 or Market collapse happening. That said even if we somehow reach A5 in 2035, we are only at about 12x density increase. If we include system packaging, chiplet, interconnect advancement pushing this to 30 to 40x. This is still a far cry from the 1000 to 10000x compute demands from a lot of AI companies. And that is assuming memory bandwidth could scale with it.
- gsky 1y agoFaild to talk about the opportunity cost
- niemandhier 1y agoRailroads lead to a distribution of capital into the society and to a long term increase of wealth for many. Ai leads to a capital concentration on the hands of those that already have money and might lead to a long term reduction of wealth for the middle class. Less purchasing power in the population usually is not good for economic development, so I have my doubts with respect to a boom .
- chii 1y ago> Railroads lead to a distribution of capital into the society does it? I recall that railroads were monopolies (the vanderbilts). The gov't had to pass an act to break them up, because there were price collusions and farmers were forced to pay a higher price for their transport of foodstuffs. > Ai leads to a capital concentration on the hands of those that already have money that is true for a lot of other capital intensive ventures. Why pick ai specifically? And AI is less monopolistic - at least it's not a natural monopoly. There are competition, and there are alternatives.
- ruined 1y agorailroads are for moving freight, and you don't move freight if you're not selling goods. yes there were trust issues, but fundamentally a railroad requires a surrounding market. ai does not, and seems to suffer the "resource curse" https://www.lesswrong.com/posts/Mak2kZuTq8Hpnqyzb/the-intelligence-curse https://www.lesswrong.com/posts/Mak2kZuTq8Hpnqyzb/the-intell...
- niemandhier 1y agoRailroads needed steel and construction. They were giant infrastructure projects build by thousands of humans. Ai is not.
- chii 1y agohow many more people are involved in the entire supply chain of a single chip, compared to construction of rail roads?
- hackable_sand 1y agoThe LLM crash is gonna be glorious
- babelfish 1y agoFor who?
- crvdgc 1y agoThe opening quote from Xi seems to come from an exaggerated report from FT. The original Mandarin report [^1] has a milder tone. AI and EV were only mentioned in a passing comment, not the focus of the meeting or the report. Feel free to skip the next section about the culture-aware interpretation of that quote. Xi's warning is more about the so-called "political tournament". Usually the central government sets some industrial policy goal (AI and EV now, but it could be other things like real estate, chips, or drones from before). The local government would collude with companies to start "projects". The goal is to get brownies points for the former and subsidy package for the latter. Of course, nothing usually comes out of these "projects". Most just stops at the factory building phase. Such practice has always been a real headache to the central government. Xi is warning about it showing up in the AI and EV industry now. [^1]: https://paper.people.com.cn/rmrb/pc/content/202507/17/content_30088242.html https://paper.people.com.cn/rmrb/pc/content/202507/17/conten...
- faragon 1y agoI would like to know the projected global impact in productivity increase because of that investment.
- weinzierl 1y ago"How extreme is AI datacenter spending? It is to the point that even Chinese President Xi Jinping is warning about it. With more than 250 datacenters under construction in his country, this week he cautioned against the spending rush, threatening to intervene:" This reminds me of the .com bubble when bandwidth, especially transatlantic bandwidth, was dire but then all of a sudden it wasn't and we had huge overcapacities for years. I wonder if this will happen witn compute?
- mad0 1y agoI wonder too. If the bubble pops, there will be a lot of cheap compute on the table. Whoever repurposes that toward some useful goal wins the prize :)